It’s understandable to be concerned, or even skeptical, about anyone other than you accessing your credit reports. How do third parties like insurance companies and banks use your credit information — and how do their decisions potentially impact you?
For example, when you apply for a new loan, a lender wants to know: If they lend you money, how likely are you to pay it back? As part of their process of determining whether to loan you money and at what rates and what terms, the lender may use the information in your Equifax credit report to help them make their decision.
But what gives this company — or any company — the right to access your consumer credit information in the first place?
It’s called “permissible purpose,” as defined by the Fair Credit Reporting Act or “FCRA,” and it allows certain companies and employers to access your Equifax credit report in order to make informed decisions about you, such as the likelihood you’ll pay your debts or be a good hire.
Who has permissible purpose?
Permissible purpose is actually a good thing. It determines who gets the green light to access your credit reports, including your Equifax credit report. Fortunately, the list of those who can access your Equifax credit report isn't very long, and some of these third parties still require your permission first. Here are some examples:
● Lenders and creditors you are applying for credit with
● Lenders who wish to prequalify you for credit or insurance
● Existing creditors you have a relationship with
● Debt collection companies to use in collecting payment
● Insurance companies, to underwrite insurance involving you
● Employers or prospective employers (with your permission)
● Rental companies/landlords, phone and utility companies
● Certain government agencies
In addition to limiting who can access your credit reports and for what purposes, the FCRA also requires the three major credit bureaus to keep a record of when your credit reports are accessed, and by whom. For example, let’s say a landlord receives a copy of your Equifax credit report because he or she is trying to determine whether to accept your rental application. The landlord's receipt of your Equifax credit report will be listed on the report under the “inquiries” section, as a record of who accessed your credit report and when.